DXY, EUR/USD, GBP/USD and S&P 500 Forecast – Markets React to Conflict in the Middle East

US Dollar Index (DXY) Technical Analysis

The US Dollar Index has rallied a bit during the early hours on Monday as we have now broken the 98 level to show signs of strength. Ultimately, the 99 level above is going to be, I think, the target.

The US dollar I think is going to be the most important thing to pay attention to as we run towards safety during the session. As I look around the currency markets, maybe the Canadian dollar is the one outlier, which makes sense because it is probably getting a little bit of a boost from oil.

But all things being equal, I am watching this. If we can stay above 98 at the end of the day, I think that would be a sign that the US dollar recovery is very much underway.

Euro (EUR/USD) Technical Analysis

The Euro has finally broken down. This is a market that had been putting everybody to sleep for a while but clearly did not have any momentum.

At this point in time, you are likely to see a retest of the 1.16 level. I like fading rallies. I have for a while; we just have not had a lot of momentum. This looks like it is changing quite rapidly.

British Pound (GBP/USD) Technical Analysis

The Pound gapped lower. We are hanging around the 200-day EMA, so I think the easiest way to approach this is to wait until the end of the day and see if we are above or below the 200-day EMA.

If we are below it, I think we will go lower, maybe 1.30, before it is all said and done. If we are not, then we are probably going to drift towards the 1.35 level as that seems to be a bit of a magnet for markets at the moment.

S&P 500 Technical Analysis

I am watching the S&P 500, and so far, it looks like it is just hanging around this crucial 6800 level. If we were to come back and bounce from here, I think that shows how resilient this market is.

In fact, looking at this, I am probably buying it today, unless of course we get some type of meltdown, because honestly, it should be down a lot more than it is.

Sometimes the analysis is simple. Just pay attention to what a market won’t do, and the S&P 500 right now just won’t fall apart. That could change of course, there could be headlines crossing the wire in the middle of the day that has everybody panicked.

But as things stand right now, considering that we now have an actual hot war going on with the Iranians, it is pretty impressive just how stable the S&P 500 really is.